460 jets ordered

[texflyer]

Overall, I agree. Trip costs will be similar, although the A319 should burn slightly less fuel because of lower weight. AA is proposing a mild B scale for the flight deck but without a B scale for the three FAs, these just wouldn't make all that much sense. Of course, if AA sees some FA retirements, the A319s should be staffed primarily with new-hires and their first few years is basically a B scale compared with their topped out pay.

You've pointed out before the absurdity of jetBlue flying 190s that seat just 2/3 as many passengers as their A320s yet paying the pilots 85% to 90% of the A320 payrates. And since the day B6 announced its mistake of adding the 190s, it's been basically break-even instead of the profits that preceded the 190 orders.

Only advantage to the A319 is that it can reliably fly thin transcons where the A320 and A321 fall short and need those winter fuel stops. If A319s and 73Gs make sense now, they would have made more sense several years ago - so why the sudden desire to fly higher CASM small mainline jets?

Fuel costs. Until fuel skyrocketed a couple of years ago, AA could make money or at least come close to break even flying around paid for MD80s with higher fuel consumption.

 

[FWAAA]

Fuel costs. Until fuel skyrocketed a couple of years ago, AA could make money or at least come close to break even flying around paid for MD80s with higher fuel consumption.

I understand that completely. That's why AA has been replacing the MD-80s with 738s which pay for themselves with fuel and maintenance savings at today's fuel prices. My question is why buy smaller mainline planes (A319 or 73G) all of a sudden? If 120-125 seat mainline jets make sense today, why didn't they order them in 2007 along with the 738s?

 

[WorldTraveler]

Overall, I agree. Trip costs will be similar, although the A319 should burn slightly less fuel because of lower weight. AA is proposing a mild B scale for the flight deck but without a B scale for the three FAs, these just wouldn't make all that much sense. Of course, if AA sees some FA retirements, the A319s should be staffed primarily with new-hires and their first few years is basically a B scale compared with their topped out pay.

You've pointed out before the absurdity of jetBlue flying 190s that seat just 2/3 as many passengers as their A320s yet paying the pilots 85% to 90% of the A320 payrates. And since the day B6 announced its mistake of adding the 190s, it's been basically break-even instead of the profits that preceded the 190 orders.

Only advantage to the A319 is that it can reliably fly thin transcons where the A320 and A321 fall short and need those winter fuel stops. If A319s and 73Gs make sense now, they would have made more sense several years ago - so why the sudden desire to fly higher CASM small mainline jets?

there is no desire to all of a sudden fly higher CASM mainline jets.. that is the point. Carriers across the board - except for AA - are not ordering the smaller versions of an aircraft family in favor of the full size or stretch versions because you can't get the weight out of a shortened version; according to DOT data provided by US airlines, the 319 burns 95% of the fuel the 320 burns but has 85% of the cockpit costs; AA might try to attack the cockpit costs but as you note, most of the rest of the costs remain the same - FA costs, landing costs... so the 319 is automatically going to be a higher cost alternative.
It is true that a smaller aircraft in a different aircraft can reduce the costs to a level such that the aircraft can be competitive; other carriers report CASMs for CR7s and CR9s (in 76 seat configs) similar to the CASM for mainline aircraft.. and it if of course the lower personnel costs of a regional carrier and the lighter aircraft that make the difference.
If B6 realized the mistake of buying E190s and their pilots make a higher percentage of their peers flying an aircraft from a larger aircraft family, I'm not sure how AA's model of cutting only one of the cost variables will succeed and then not near as much as the cost difference between the 320 and 319. The 319 will still be a higher CASM and absolute cost aircraft than other carriers will have using their large RJs.
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Whatever performance issues the 320 will have on transcons will be eliminated w/ the new engines... until then AA has plenty of 738s and 757s that are part of the fleet for those markets that need true transcon performance.

I understand that completely. That's why AA has been replacing the MD-80s with 738s which pay for themselves with fuel and maintenance savings at today's fuel prices. My question is why buy smaller mainline planes (A319 or 73G) all of a sudden? If 120-125 seat mainline jets make sense today, why didn't they order them in 2007 along with the 738s?

I agree.. and other carriers not have more aircraft options with the large RJs.. .which is a comparable CASM aircraft... and it also helps shift some of the risk for capacity planning to other carriers.
remember that for whatever reason, DL says their 100 new 739ERs are not being acquired to replace M80s... those planes will continue in service... apparently the fuel/maintenance equation is not equal even for the same series of aircraft.. and perhaps part is because some of DL's M80s are on leases that will expire in a few years so DL has the option to either keep the planes and pay next to nothing for leases or give the airplanes back to the leasing companies and those planes will never fly again.
Also, DL outsources its airframe overhauls on the M80 which is a big part of the equation in keeping older aircraft.

 

[chris perry]

Rj's were a fad everyone (airlines) had to have 100 or so yesterday...Now economic's are worse than a S80...Sounds like a plan,so in the long run it would have been cheaper to buy larger aircraft...aka 737. Was this not a Management decision?

 

[FWAAA]

Rj's were a fad everyone (airlines) had to have 100 or so yesterday...Now economic's are worse than a S80...Sounds like a plan,so in the long run it would have been cheaper to buy larger aircraft...aka 737. Was this not a Management decision?

Delta pilots gave up scope nearly a decade before the APA did, which resulted in ASA and Comair flying dozens of 50-seat RJs a long time before Eagle got their first in 1999. Eagle (and thus AA) was forced to compete with its turboprops against RJs. Turboprops are just as safe and reliable as RJs but too many of the average passengers look at props and becomes frightened and wishes they were on a turbine aircraft where all the blades are within the engine (no visible props).

So, yep, management climbed on the bandwagon and bought a couple hundred RJs, just as fuel was beginning its climb from $0.55/gal to the recent prices of $3.25/gal. That nearly six-fold increase in the price of fuel is what killed the economics of the RJs. When fuel was cheap and mainline labor was relatively expensive (before concessions), RJs flown by cheap pilots and staffed by cheap FAs and maintained by cheaper mechanics were a beancounter's dream. Sure, they wasted fuel compared to the ATRs, SAABs, the Jetstreams and the Shorts, but fuel was cheap - so who cared?

By time Eagle was able to catch up to Delta in the RJ count, fuel was already above $1.00/gal and on its steady climb to the sky-high price of today. UA's pilots also folded on scope prior the APA agreement of 1997, giving UA an advantage.

So yes, the ill-fated decision to buy too many out-of-favor small RJs was a management decision, driven by the inability to predict that fuel would cost about six times more in 2011 than it did in 1998.

Would it have made sense to buy expensive 737s in 1997-98 instead of 50-seat RJs? Nope. At the time, AA had 260 MD-80s that filled that role and fuel was practically free.

As fuel has climbed in price over the past decade, larger RJs make more sense, like the 70-90 seat variety. My question above (the one that went over texflyer's head) is "why has AA all of a sudden decided to do what no other airline is doing - and that is buy A319s and 73Gs?" Even WN, one of the largest 73G operators, is now buying 738s, as they get more capacity for not much more fuel burn. WN will add one more FA to its 738s (assuming they go past 150 seats), but even AA has decided the extra FA (for AA's 160 seat 738s) gets paid for thru higher capacity. Apparently, enough of those last 10 seats gets sold often enough to make the last 10 seats worthwhile.

Another management failure was the purchase of the 75 Fokkers. Management fail. IMO, AA should have pushed MD for the MD-95 earlier and bought 100-150 of them.

 

[FWAAA]

A couple of articles on the fuel inefficiency of small RJs compared to mainline planes - the Atlanta article is from Friday and the WSJ is from last year:

http://www.ajc.com/business/airlines-cut-small-jets-1240775.html

http://online.wsj.com/article/SB10001424052748704901104575423261677748380.html

 

[WorldTraveler]

you are correct, FWA. For whatever reason, AA, which for years was the master of airline marketing, was one cycle behind the rest of the industry with respect to regional carrier arrangments... first the switch to 50 seaters from turboprops and then the switch to larger RJs.... and part of the way to compensate is by flying smaller mainline aircraft which are not as fuel efficient.
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Yes, the trend in both RJs and mainline aircraft is to the larger, if not largest models within an aircraft family in order to increase fuel efficiency.
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Thus, AA's plan to buy/lease the 319 seems to be an effort to force up costs.
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Of course, one theory could be that buying the 319 is a strategy to be used outside of BK. If AA files, and they get the lower wages for the 320, then they will convert the orders to 320s and there will be no 319s anyway... and they will likely get relaxed scope on large RJs.

 

[PhatSappy]

http://finance.yahoo.com/news/AMR-Corporation-Announces-prnews-3494254702.html?x=0&.v=1

HA! This one is gone too.

 

[Hopeful]

HA! This one is gone too.

Not necessarily....When AA inked the financing deals with Airbus and Boeing, they included BANKTRUPTCY provisions...To keep the favorable terms.

 

[eolesen]

Not necessarily....When AA inked the financing deals with Airbus and Boeing, they included BANKTRUPTCY provisions...To keep the favorable terms.

Correct. AMR may have the ability to reject some of the deals, but Boeing and Airbus already agreed to bankruptcy provisions & protections.

 

[KILOFINAL]

This order as impressive as it is, is a hodgepodge of parts and planes. Not a very cost effective way to manage a fleet. Different aircraft, different engines.....not good. I can understand the cockpit comonality of the airbus fleet, but mixing up aircraft and engine types is not good.

 

[eolesen]

This order as impressive as it is, is a hodgepodge of parts and planes. Not a very cost effective way to manage a fleet. Different aircraft, different engines.....not good. I can understand the cockpit comonality of the airbus fleet, but mixing up aircraft and engine types is not good.

Normally, I'd agree, unless there were already agreements in place for someone else to maintain the airframes and engines.

Some people have pointed out that no single MRO could maintain AA's fleet. Perhaps not, but several smaller ones could.

 

[FWAAA]

HA! This one is gone too.

As hopeful and eolesen pointed out, you're probably incorrect.

When the huge order was announced, I posted that Airbus and Boeing were probably onboard with a Ch 11 filing - rejecting old airplanes and other obligations and further cutting wages, benefits and headcount would make it easier for AA to pay for the new planes. Might have been a condition of the favorable financing deals.